Abhishek Singh Rajpurohit
In the 21st century, especially in the 2020s, humans are more connected than ever. Long gone are the days when the only means to connect were phone calls, web-based internet platforms, and face-to-face meetings. With the advent of Web-3 and the Metaverse, communication between humans now happens in ways we never thought possible. Distance has now become a non-existent barrier and the world of augmented/virtual reality has come closer.
Some corporations and businesses have seen the potential of this revolutionary technology and have moved to adapt it. This change, for most of them, turned out to be a game changer. These companies experienced massive growth and started earning profits. Most of these companies and tech giants are heading into broader horizons for the foreseeable future, and one of them is Meta.
Meta and Metaverse Business Opportunities
On Thursday, October 28, 2021, Facebook Founder and CEO Mark Zuckerberg announced the company’s new name, “Meta,” during a virtual event. In the event’s video feed, Zuckerberg unveiled a series of new developments, focusing on how the company’s rebranding signaled its key involvement in the Metaverse. Before renaming the company and making the switch, however, Zuckerberg and the Facebook team had been working in that direction for years. After a $2 billion acquisition of virtual reality company Oculus VR in 2014, the team created Facebook’s “Reality Labs”; as a way to accelerate the development of AR/VR technologies.
Financial Implications of Changing Meta
In January 2022, Mark Zuckerberg shared the running costs of his company’s transition to Meta. Facebook’s Reality Labs division (makers of ANS virtual reality glasses, among others), lost more than $10 billion. That figure was more than five times the amount used to buy the Oculus VR business in the first place. It’s also ten times the amount Facebook paid to acquire Instagram in 2012.
This change has hit the company hard, as its quarterly profits fell 8% to $10.3 billion from October to December 2021. And yet their overall revenue fell from 20% to 33.7% on the same period. Proving that while a shift to the metaverse would naturally cause some loss, the mere mention of the words “metaverse”, augmented reality or “virtual reality”; can have a big impact on a company’s finances.
Challenges with Meta rebranding
To be realistic, rebranding and investment in the metaverse is far from fully profitable. Especially since most of the technologies on which the metaverse is based are still in development. The metaverse will certainly emerge soon. But that day is not today. Meta’s spending on its rebranding is unlikely to reduce or net all of its rewards anytime soon. Especially now that other tech giants have emerged and are vying for facebook’s place as the leading social platform. One such company is the popular social app TikTok.
Other companies that have taken the leap
Facebook isn’t the only company to take the leap. Some other companies have also seen the potential of the metaverse to generate revenue by combining virtual reality, online shopping, wearable technology, artificial intelligence, cryptography, NFTs and many more. Facebook is perhaps the most popular example, but a handful of others have jumped on the bandwagon. Some of them are better known than others, and here are a few.
Next to Facebook on lists like these, tech giant Microsoft always seems to follow. This is not surprising, as Microsoft is a keen investor in various technology niches such as security, spyware, video games, and hardware/mobile devices, to name a few.
During the covid-19 pandemic, Microsoft employees began to feel the effects of a lack of social interaction. As a solution to this, Microsoft announced a branch into metaverse technology and unveiled its “Mesh For Microsoft Team” which will be fully available in 2022. “Mesh is a mixed reality overlay that allows its users to meet, to socialize and hold meetings in virtual spaces. This new branch will use the power of mixed reality glasses and VR headsets, much like Meta’s Reality Labs.
Microsoft mesh is built on Azure, creating a space for real-time virtual meetings where its users can join Hololens 2 VR headsets, PCs, and even smartphones/tablets. Despite such a large revenue base ($168 billion) in 2021, Microsoft has seen an unwavering average revenue growth rate of around 15% over the past 5 years. Microsoft mesh is configured to allow connection with “holograms”; and mixed reality. (M). It is expected to grow from its current valuation of around $16.7 billion in 2022 to over $227 billion by 2029. A 45% increase.
Major microchip makers and tech giant Nvidia are also among the companies that have shown interest in the potential of the metaverse. Every day, people use Nvidia’s chips to access immersive video games featuring realistic virtual worlds. The company’s interest in virtual reality is therefore not a surprise. Nvidia has since created its software platform "omniverse" to create virtual spaces. Nvidia currently has quarterly revenue of $7.64 billion (up a 56% increase from 2021). Coincidentally, Nvidia also announced the general availability of its Omniverse platform in April 2021.
Some would argue that the omniverse platform played a role in the company’s revenue explosion. Nvidia is a market leader in the production of high performance graphics cards or GPUs. A major contributor to metaverse technology. Its GPU market was worth $22 billion in 2020 and is expected to grow at a CAGR (compound annual growth rate) of 31.87% through 2028. By then, its market valuation would have reached $165 billion. Nvidia’s focus on high-performance GPUs as well as the metaverse perfectly illustrates the saying “in a gold rush, sell shovels”. In total, Nvidia currently has annual revenue of around $2 billion, a whopping 61% increase. All in one year, coinciding with the explosion of the metaverse and their involvement in it.
Virtual reality concepts, while not fully fledged back then, have been around for quite some time. Especially since the advent of Snapchat filters and games like Pokèmon Go. In 2019, research and markets predicted that the global mixed reality (MR) market could reach a valuation of $2.8 billion by 2023. An expected growth factor of 77% at the time. However, when mixed, virtual and augmented reality technologies are combined, the market valuation is expected to reach $120 billion by 2023 and $300 billion by 2025.
The author is co-founder, CMO of Acknoledger